Delaware Mid Cap Value Fund Quarterly commentary December 31, 2014

Within the Fund

Delaware Mid Cap Value Fund (Class A shares at net asset value and Institutional Class shares) underperformed its benchmark, the Russell Midcap® Value Index, during the fourth quarter of 2014. Stock selection in the energy and capital spending sectors detracted the most from the Fund’s return. The Fund’s underweight allocation to real estate investments trusts (REITs) also detracted from performance as the sector generally outperformed most. Stock selection in the consumer services, healthcare, and basic industry sectors were the most positive contributors to relative returns.

During the fourth quarter, performance was hampered by several energy stocks, led by Whiting Petroleum, an exploration and production company with primary operations in the Bakken Shale formation and the Rocky Mountains. While we had reduced the Fund’s position in Whiting Petroleum during the third quarter of 2014 (after the company announced its plan to acquire Kodiak Oil & Gas) we retained a smaller position due to the relative valuation versus other oil and gas companies, and the expected growth from the acquisition. The stock fell 57% during the quarter as the price of oil had a significant decline following the decision by the Organization of the Petroleum Exporting Countries (OPEC) not to cut production. With oil being the vast majority of the company’s production, the stock suffered more than most did in the sector.

Chicago Bridge & Iron is an engineering and construction company with significant exposure to the energy sector. During the quarter, the stock declined 27% in reaction to declining oil and gas prices and concerns of postponement or cancellation of Gulf Coast energy projects. We maintain the Fund’s position in the stock due to the attractive relative valuation and our constructive long-term view of the global energy sector.

Comerica is a regional bank with primary operations in Michigan, California, and Texas. The stock declined 6% during the quarter as investors continued to worry that the U.S. Federal Reserve will maintain extremely low rates longer than forecast. In the near term, investors are concerned that the decline in the price of oil could slow loan growth in Texas, which has been a successful market for the bank in recent years. Additionally, in the longer-term (if oil prices stay low) the number of nonperforming loans at the bank could increase. We maintained the Fund’s position due to the bank’s relative valuation and its asset sensitivity.

Among the stocks that contributed to performance was Bloomin’ Brands, a casual dining chain that operates Outback Steakhouse, Bonefish Grill, and Carrabba’s restaurants. The stock appreciated 35% during the quarter as the company announced solid third quarter earnings after a miss in the second quarter. We maintained the Fund’s position in Bloomin’ Brands during the quarter as we are attracted to the company’s strong brand names, attractive valuation, and healthy free cash flow.

Becton Dickinson, a medical device and instruments company, advanced 23% during the fourth quarter as investors were pleased with the announcement of an accretive acquisition of CareFusion for cash and stock. CareFusion sells medical technology products that are complementary to those that Becton Dickinson currently produces. In our view, the transaction should help the company leverage a combined infrastructure. We maintained the Fund’s position in Becton Dickinson as we believe the proposed transaction could result in significant synergies. In addition, the company’s valuation looks attractive to us and we think the company will seek to delever its balance sheet after the deal closes.

Tesoro is a major petroleum refiner in the United States with primary operations on the west coast. The stock rose 22% during the quarter as earnings came in well above expectations and the company increased its guidance for free cash flow over the next few years. We reduced the Fund’s position during the quarter as the stock was approaching our target price.

Outlook

We believe that the outlook for the economy and equities remains favorable. As we enter 2015, we believe the economy should continue to grow at a moderate pace as employment trends, manufacturing data, and consumer spending continue to improve. We expect this positive economic backdrop to provide the opportunity for companies to continue on an earnings growth path in 2015 which should help to support equity markets.

In the fourth quarter, the Fed ended its quantitative easing program and, as a result, monetary policy has become slightly less accommodative. In this type of environment, we believe that higher-quality companies, which we define as those with strong free cash flow and solid balance sheets, should outperform lower-quality, more speculative companies. The Fund’s positioning coming into 2015 remains largely unchanged with overweights in basic industries, capital spending, and technology. We remain underweight traditionally defensive sectors including utilities and REITs, where we do not view valuations as attractive. We will continue to identify what we view as high-quality companies that are likely to deploy their cash in shareholder-friendly ways such as dividends or share repurchases.

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The views expressed represent the Manager's assessment of the Fund and market environment as of the date indicated, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Information is as of the date indicated and subject to change.

Document must be used in its entirety.

Performance

The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.

Total returns may reflect waivers and/or expense reimbursements by the manager and/or distributor for some or all of the periods shown. Performance would have been lower without such waivers and reimbursements.

Class A shares have a maximum up-front sales charge of 5.75% and are subject to an annual distribution fee.

Prior to July 31, 2008, the Fund had not engaged in a broad distribution of its shares and had been subject to limited redemption requests. The returns reflect expense limitations that were in effect during certain periods and which may have been lower than the Fund’s current expenses. The returns would have been lower without expense limitations.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Feb. 27, 2015 through Feb. 29, 2016. Please see the fee table in the Fund’s prospectus for more information.

Top 10 holdings as of 02/28/2015Holdings are as of the date indicated and subject to change.List excludes cash and cash equivalents.

Holding

% of portfolio

East West Bancorp Inc.

2.9%

American Financial Group Inc.

2.7%

United Rentals Inc.

2.3%

Torchmark Corp.

2.1%

Fiserv Inc.

2.1%

Comerica Inc.

2.1%

Cytec Industries Inc.

2.0%

HCC Insurance Holdings Inc.

2.0%

Raymond James Financial Inc.

2.0%

Reinsurance Group of America Inc.

1.9%

Total % Portfolio in Top 10 holdings

22.1%

Institutional Class shares are only available to certain investors. See the prospectus for more information.

All third-party marks cited are the property of their respective owners.

Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by clicking the prospectus link located in the right-hand sidebar or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

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Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

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Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds' distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.